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Compensation and Intrinsic Motivation in Nonprofit and For-Profit Organizations

Author

Listed:
  • DeVaro, Jed
  • Maxwell, Nan
  • Morita, Hodaka

Abstract

We develop a theoretical model in which for-profit and nonprofit employers compete to hire a worker who derives intrinsic motivation from the nonprofit’s social mission. We also use a unique data set of California establishments to provide new evidence on sectoral differences in pay and HRM systems, finding a greater incidence of training and benefits in nonprofits, lower wages (with the wage gap increasing in skill level), and less incentive pay than in for-profits. The model is used to interpret both this new evidence and other empirical results from the literature, including the inconclusive sign of the FP-NP wage differential.

Suggested Citation

  • DeVaro, Jed & Maxwell, Nan & Morita, Hodaka, 2016. "Compensation and Intrinsic Motivation in Nonprofit and For-Profit Organizations," CEI Working Paper Series 2015-10, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2015-10
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/28285/wp2015-10.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    nonprofits; incentive pay; intrinsic motivation; compensating differentials; fringe benefits; training;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other

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